Defiance Silver Corp (TSX VENTURE: DEF) (“Defiance”) is pleased to announce the signing of an option agreement to acquire from a private Mexican company, a 100% interest in the San Acacio silver mine located in the historic Zacatecas Silver District, Mexico. The past producing San Acacio mine consisting of 10 mining concessions totaling 7.46 km2, hosts the southeastern half of the Veta Grande vein system, one of the three prominent vein systems in the historic billion-ounce silver producing Zacatecas Silver District.
Since discovery of silver in the Zacatecas District in 1546, historical sources estimate that over 180 million ounces of silver have been extracted from the Veta Grande vein system. Old mine workings on the Veta Grande vein system extend to a vertical depth of 335 meters accessing four separate veins of which the Veta Grande was the most important. Early production focused on the near surface rich oxide portions of the veins with lesser production from the deeper sulphide ores.
A prior National Instrument 43-101 (“NI 43-101”) compliant report prepared by PEG Mining Consultants Inc. dated May 21st, 2010 and filed on SEDAR (under the profile of Source Exploration Corp.), provided a historical estimate of an Indicated resource of 4.05 million ounces of silver and 9000 ounces of gold as well as an Inferred resource of 14.35 million ounces of silver and 22,200 ounces of gold. The Inferred resource includes approximately 740,000 tonnes of mineralized backfill material existing in the old stopes grading 232.6g/t silver and 0.20 g/t gold. (See Source Exploration Corp. News Release dated June 22, 2010). Partial access to the mineralized material in the old stopes is available at the Refugio adit elevation. Defiance’s previously optioned Santa Gabriela mill is located within 5 km of the San Acacio property.
The mineral resource estimate is based on 41 drills holes completed by Source Exploration Corp. and Silver Standard Resources and 371 drill core assay values contained within the mineralized zones. This data was complemented with 275 underground chip samples sourced from Silver Standard and Sterling Mining level plans. Defiance did not commission the PEG Mining Consultants report. Defiance has not verified the data underlying the resource estimates, but has no reason to expect the estimates to be erroneous in any way. However as a Defiance commissioned Qualified Person has not done sufficient work to classify this historical estimate as current mineral resources, the issuer is not treating this historical estimate as current mineral resources and the historical estimate should not be relied upon.
The San Acacio property, which hosts over 60% of the known Veta Grande vein system, has excellent exploration potential. The 2012 exploration program will concentrate on drill testing along strike and down dip from the known mineralized veins to expand the historical mineral resources, as well as mapping, trenching and sampling to identify drill targets on the strike extensions to the southeast that have not been subjected to modern exploration techniques.
The total purchase price for the proposed acquisition is US$5.75 million dollars with a royalty on production from the property. On signing the option agreement, Defiance paid US$25,000 for an initial 90 day period for evaluation and due diligence which can be extended for a further 90 days on payment of US$50,000. On or before the end of the initial or the extended option periods, Defiance can execute a purchase agreement upon paying US$250,000 or US$200,000 respectively with a deferred purchase payment of US$5.5 million for a period of 12 or 9 months respectively. The purchase agreement also provides for a 2.5% net smelter return royalty payable to the vendor on production from the property. Defiance will have the right to purchase the royalty at any time for the price of US$2.5 million which after five years will escalate with the official Mexican Inflation Index.
Under terms of the purchase agreement, Defiance can also purchase: surface rights covering 12 ha controlling the adit access to the underground workings for US$5,000; and surface rights covering 12.0246 ha on which are located approximately 300,000 tonnes of tailings from the former San Acacio mine which can be purchased for a price of US$1.50 per tonne of tailings as defined by future Defiance work programs.
“This potential acquisition is a major advance in Defiance’s strategic plan to become a significant silver producer and land consolidator in the Zacatecas silver district and will complement the option agreement to acquire the Santa Gabriela processing plant from IMPACT Silver Corp. announced September 12, 2011,” stated Bruce Winfield, President and CEO.
Defiance Silver Corp. is a near-term silver producer in Mexico. With a strong team of proven mine finders and developers, Defiance is focused upon being an aggressive explorer and acquirer of exploration and development silver projects in the historic billion-ounce silver producing Zacatecas District.
Bruce Winfield, P. Geo., a Qualified Person under the meaning of Canadian National Instrument 43-101, is responsible for the technical content of this news release.
This agreement is subject to the approval of the TSX Venture exchange.
On behalf of Defiance Silver Corp.
President and CEO
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.